Workers’ Compensation Insurance Questions & Answers

By John Harp, CSP, ARM—Risk Engineering Consultant, Mitsui Sumitomo Insurance Group

1. What is workers’ compensation insurance?

            This insurance is protection for employees who are injured or become ill during the course of their job. It can be the result of an incident—like hurting their back lifting a case of water or being injured during an assault or getting sick from cleaning solvents.

Workers’ compensation insurance offers five basic benefits:

• Medical care for the injured worker.
• Temporary disability benefits to help pay for lost wages while the injured employee is recovering.
• Permanent disability benefits if an employee can’t return to work.
• Supplemental job displacement benefits that pay for skill enhancement or retraining if the injured worker can’t return to the job they had before the injury.
• Death benefits paid to a spouse, children, or dependents if the worker dies as a result of a job-related injury or illness.

 

2. How much does workers’ compensation cost?

Your cost is based on several factors:

• Payroll
• Location
• Industry and risk factors
• Claims history (an important and unique benefit of the franchisee program)

 

3. Do I have to buy workers’ compensation insurance?

Workers’ comp is required in every state except Texas. However, your franchise ownership agreement might require you to purchase the insurance regardless of state requirements. More than half of all states require employers to carry coverage if they have one or more employees. Yes, even a small business needs workers’ comp.

In some states (e.g. Ohio, Washington) workers’ compensation is only available through a state fund.

The penalties if you do not obtain workers’ comp insurance can be significant. It can lead to allegations of criminal noncompliance in some states. It can also lead to fines that vary depending on the number of employees, the reason for noncompliance, and the amount of time a business was noncompliant.

 

4. Who does workers’ compensation insurance cover?

 A workers’ compensation policy covers employees who’ve been injured or become ill from the job during employment-related activities. Which employees are eligible depends on each state.

It does not cover employees who have been injured outside their job role, self-inflicted injuries, injuries or illnesses from drugs or alcohol intoxication, injuries caused by fights or horseplay, or injuries sustained after an individual’s employment has been terminated.

This insurance can also cover you as the business owner, but in many states, the owner is not required to be included. If you have the option, choosing whether to include yourself on the policy is personal. Check with your broker or agent for advice.

 

5. How is workers’ compensation different than group health?

Workers’ compensation insurance is state-regulated coverage for workers who get injured or ill on the job. Group health insurance is coverage for preventative care and medical expenses for injuries or illnesses not occurring from the workplace. Most health insurance policies specifically exclude coverage for conditions covered by workers’ compensation insurance.

 

6. Should I obtain workers’ compensation insurance direct from the carrier or through a broker or agent?

Considering it’s essential to protect yourself, your business, and your employees, it is best to work with an insurance agent or broker. They understand the specific risks your business faces and guide you in partnership with the insurance company, and support safety in your organization to help manage costs.

Important elements for success your broker and insurance company can support:

• Safety program information that is consistent with retail and the type of hazards commonly found in the stores.
• Owner, manager, and employee support for the safety effort, including regular safety training and safe work procedure review, and post-injury management procedures. All of these are essential to reducing injuries and managing costs.
• Advocating fair and effective claims handling.

 

7. What are the most common types of employee injuries in convenience stores?

The three most common types of workplace injuries are:

1. Overexertion. Lifting heavy objects like cases of water can lead to strains and sprains. Keeping heavy objects close to the body, bending at the hips, keeping good posture, and maintaining overall good condition can help to prevent these injuries.
2. Slip, Trips, and Falls. This could be from spills, a recently mopped floor, or obstacles on the floor. Since these risks could also injure a customer, it’s imperative to maintain good housekeeping—keeping things like brooms in their place, using clean mop heads and mopping when there’s less traffic, and using the “wet floor” signs when appropriate, with employees wearing the proper footwear.
3. Assault-related injuries. These tend to be the most serious injuries and require constant reminders for employees on how to handle suspect shoplifting or criminal threats. A proper, calm response to the situation and an understanding to never leave the store during or immediately after an assault can prevent injuries or save a life.

 

8. How can I manage workers’ compensation claims or losses?

All owners, regardless of the number of stores, should have a safety program and ongoing safety training.

• Consult the experts. There is plenty of literature about the best ways to mitigate injury risks. MSIG or your insurance company/broker have knowledge and resources to improve risk control in your store.
• Train constantly. Don’t just train new employees. Make sure everybody is going through ongoing training sessions so they’re up-to-date and reminded of safety procedures, especially related to crime.
• Review your store for employee and customer safety risks. Survey your store to identify potential hazards and how they might affect employee safety. After the assessment, follow up to make sure the hazard has either been eliminated or that training is provided to help workers avoid injury. “
• Provide the right tools. Simple items like safety cutters, good floor mats, or quality step ladders can help prevent injuries and illnesses.
• Report the claim as soon as possible. Report it to the insurance company even if you’re not sure it’s a viable claim.

 

9. How can I fight workers’ compensation fraud?

Workers’ compensation fraud is unfortunately common. Employees can exaggerate or claim the injury happened at work to receive benefits while staying out of work. In fact, the National Insurance Crime Bureau reports that workers’ compensation fraud costs employers over $7.2 billion annually.

Here are some things you can do to prevent fraud:

• Look for warning signs. Was the injury reported soon after the employee’s day off? Did it happen immediately following a job termination? Were there no witnesses? Does the claimant have a history of suspicious claims? Was the injury reported late? Are they refusing X-rays or other diagnostic tests? These can all be warning signs of fraud.
• Assure your surveillance system includes the vault and back rooms. Questionable injuries tend to happen where there are no witnesses or camera coverage.
• Communicate a zero-tolerance policy for workers’ compensation fraud. Tell your employees about the costs of workers’ compensation fraud and explain that it could lead to serious consequences.
• Encourage employees to share suspicions. Creating an environment where people can speak out will help detect fraudulent behavior.
• Let your claims adjuster know your suspicions. When it’s serious enough, the claims staff may hire a private investigator to conduct surveillance. This might determine a situation where the claim can be denied or fraud can be pursued.

 

10. What are some common workers’ compensation terms?

There is plenty of jargon associated with workers’ compensation insurance. Here’s a basic glossary of terms:

• Accepted claim/admitted claim: A workers’ compensation claim in which the injury or illness is covered by workers’ compensation insurance.
• Alternative work/light duty: A new job offered to an injured employee that gets them back to work but not in the same role they performed while getting injured.
• Claims administrator/adjuster: The individual at an insurance company who handles an injured worker’s claim.
• Impairment rating: The percentage estimate of how much an injury has affected the use of an injured worker’s body. It can include physical impairments or mental impairments, and be permanent or temporary, severe or mild.
• Independent medical examination (IME): A medical exam performed by a physician not chosen by the company or the injured worker. This step is typically taken after a dispute arises over the extent of an injury.
• Permanent disability: Payments to an injured employee when an on-the-job injury permanently limits the kinds of work they can do and/or their ability to earn a living.
• Temporary partial disability: Payments to an injured employee who can still work, but not at the same rate or level that they did before the injury or illness. These payments are available for a limited time, ending when a worker makes a full recovery.
• Temporary total disability: Payments to an injured employee who is unable to work at all for a temporary period. The benefits stop when the employee can resume working.

 

Summary

Workers’ compensation insurance is an essential part of your insurance program and protects your employees and the business. It can be confusing, but it’s there for peace of mind knowing your injured employee will be cared for without paying out of pocket, which is why it’s important to choose your insurance company and broker wisely. They will support you with this process.

Also, your claims adjuster is your expert at navigating the rules and requirements of effectively applying the proper benefits promptly. Work with your adjuster and contact them when you have any questions.